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Here’s why Select Harvests Limited is a good buy today

Select Harvests Limited (ASX: SHV), Australia’s second largest almond grower and producer, is reportedly interested in acquiring a further 230 hectares of planted almond groves near Mildura, Victoria.

As reported by The Australian Financial Review, the company is circling the Thurla Farms which are said to be worth roughly $35 million. The property is 2,974 hectares and contains 230 hectares of planted almond groves (with first harvest in 2015 and 2016), as well as 118 hectares of vineyards, seven hectares of avocado trees, 81 hectares of irrigated land planted to lucerne and 815 hectares of irrigation infrastructure, amongst other assets. Some parts of the farm, including the large aquaculture business, are not up for sale.

Such an acquisition could provide Select Harvests with synergy benefits after it spent $8.5 million on the nearby orchards in Cullulleraine last year.

At $6.77 per share, Select Harvests trades on a projected P/E ratio of just 11.1x and is certainly a stock for investors to consider. While the stock has already risen substantially in recent years, it should continue to benefit from rising almond prices as a result of the severe drought blanketing California – the world’s largest producing region.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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